A U.S. judge on Thursday blocked the disputed $8.5 billion merger between handbag and accessories makers Tapestry and Capri, a victory for the Federal Trade Commission in an industry where merger issues are rare.
The FTC argued in an eight-day trial in New York that the merger would eliminate fierce direct competition between the top two U.S. handbag makers and create a giant company with the power to unfairly jack up prices for consumers. insisted.
Coach's parent company, Tapestry, said the deal was prompted by the highly competitive U.S. handbag industry and a need to fight back against European companies like Gucci that are increasingly gaining market share. and refuted these claims.
Tapestry's lawyers said in court documents that the ruling effectively permanently blocks the proposed transaction. There is little precedent for challenging mergers in the fashion industry, which tends to be too fragmented and competitive to foster traditional monopolies.
The decision is a victory for the Biden administration ahead of the Nov. 5 presidential election, where rising consumer prices are a key issue.
If the deal went ahead, it would have brought six brands under one roof. Those brands are Tapestry Coach, Kate Spade and Stuart Weitzman. and Capri's Versace, Jimmy Choo, and Michael Kors.
Tapestry and Capri also asked U.S. District Judge Jennifer Rochon to reinstate the Michael Kors brand and use Tapestry's greater resources to invest in all of Capri's brands and sell more handbags. argued that it would actually increase competition in the industry rather than reduce it.
The ruling follows regulatory approvals for the merger in Japan and the European Union earlier this year.
